Consignment

[Matt-M-McElroy]

I've got a couple of consignment deals with publishers going for the Flames Rising website currently. I've got a new online store and hit several small conventions in the Midwest throughout the year...

I'm wondering what publishers/designers think of this as an option for getting some product out where fans can see it. Is it something that would interest you as a publisher? Why or why not?

I'm looking at buying some inventory from Key20 eventually, but one of the things as a small retailer that stops me from buying direct is the upfront cost. It can be quite expensive to pay for a bunch of product that I might have to sit on for some time. Consignment offers me a chance to start selling items and split the income with the publisher.

Regards,

Matt M McElroy
"What Are You Afraid Of?"
http://www.flamesrising.com

[TonyLB]

Well, it's a question of who pays for inventory that isn't moving.

If the publisher gives you books on consignment then they're gambling that you'll be able to sell them.  The risk (of having a portion of their inventory collecting dust rather than making them money) is entirely on them.  If the publisher insists that retailers pay cash then the retailer needs to gamble that they'll be able to sell the books.  The risk is entirely on the retailer.

On some level, I support a "retailer takes the risk" argument.  The publisher, after all, is not the one who knows the retailer's clientelle.  The publisher is not the one who should be researching that particular market, or judging customers.  I figure that part of why retailers make the big bucks (wry, sheepish smile definitely intended) is because they're willing to do that research and then gamble on their own foresight.

[timfire]

Are you asking a general question or are you asking if people want to "sign up"?

Generally speaking, isn't the usual deal that if you take product on consignment, then the retailer takes a smaller cut than normal? Personally, I doubt I would I agree to consignment if the the retailer still wanted 40-50%.

[daMoose_Neo]

Consignment works quite well for myself with smaller stores.
The one consignment deal I worked out ended up moving 3 cases (36 decks) in around a month.
Find a good shop with a friendly owner and its not a hard deal to sell. They get a product to sell and money with no upfront investment. Allows them to take more risk and they're more apt to deal with the product in lower quantities than if they had to purchase them up front. My deal nets a retailer around 40%, which is close to what a little guy would get from an order through distribution product (Larger orders get the discount, local small stores don't place as large of an order, don't get as much of a discount).

[jdagna]

I posted a consignment-specific reply over on RPG.net, but when I saw your post again over here, I had a thought you might consider...

Instead of a standard consignment deal, what if you did things by drop-ship?  That is, you sell a book over your website, and send the order (and part of the payment) to the publisher, who ships the book to your buyer.  This way, you're able to list and sell merchandise you don't have to stock, but the publisher is still getting paid for everything that leaves his warehouse (or closet, depending on their scale).

If you want things to look consolidated/professional, you can send shipping labels and/or packing slips in PDF format to the publishers.  These will list your business so that the buyer may not realize that the product was drop-shipped at all.  If customers order from multiple publishers, just mark your labels/slips with "Package #x of y" on each one so that people aren't surprised to receive separate packages.

[Matt-M-McElroy]

Hey folks,

Thanks for the replies.

Most of the deals I currently have I get 25% or 30% of the the sale and the publisher takes the rest. I'm happy with those prices, but I can understand where other retailers might not be. In my opinion, because I'm going with consignment instead of direct purchase I should be taking a lesser cut of the sale. To me, that is the trade-off between the two options.

I also only have between 3 and 5 of each product with these deals to start out. This is less risk for the publishers (since they are not sending me a case of product). I get to see if something will sell or not (and why, perhaps I need to run some more demos or change my pitch).

I'm usually willing to work out deals, depending on the publisher/product. The point is to get the product into the customer's hands. I'm certainly not trying to put anyone at risk for losing money.

I also offer banner ads and a News feed on the Flames Rising site, which might be another way for a publisher to get a little exposure for their product/website.

Regards,

Matt

[Mike Holmes]

For Matt, Justin, the problem would be not having product on hand to sell at cons. Otherwise the Drop-Ship idea seems to be a good one for the publisher who wants to get in on some retailer's store presence. Not sure how much that's worth per copy, however.

I think Matt's consignment price is pretty reasonable, and I can vouch for him as a seller. (OTOH, I should note that he may be GMing for me this weekend, so I might be biased.)

:-)

Mike

[Valamir]

Hi Matt.

I can speak with some experience on this as I used to have a number of consignment arrangements with various folks whom I'd send 2-6 copies at a time to and eventually they'd send me some money representing what they sold, minus a small cut.

It worked well in so far as it got Universalis exposure at smaller regional cons that I wasn't going to be able to attend.

However, for both parties, in practice, it turned into a major pain in the tuckas.  From the publisher's perspective its an inventory control problem.  We can't expense the cost of printing the book until after the book is sold.  But with a consignment arrangement its not sufficient to simply count inventory to see what's been sold, because now there is stock that is "out there" that hasn't been sold yet.  Not even getting into the issue of whether the other party is ripping me off (none ever have) you also have the issue of not necessarily getting status updates all that timely..."hey, have you sold any of those books yet?..."Oh yeah, I sold a couple last week, let me check to see how many that was".  No real problem but it definitely becomes a hassle.

Its also a hassle for the consignee as well.  I've had 2 folks come to me and say "from now on just give me the 50% discount up front, its too much of a pain otherwise".

So now, all of my third party arrangements with individuals are all for cash up front.  I can record a sale and be done with it (and not care when or if you ever sell those copies) and you can pocket a heck of alot more (and, honestly, are that much more motivated to sell).


So I guess my conclusion would be.  Yes consignment does work.  It can be a nice way to get off the ground and develop a relationship but I think simply buying at a discount is way cleaner and easier for everyone involved.

In fact, if I were ever to do a consignment deal again it would probably be a 1 time thing with the idea that their cut from the initial consignment would be used to buy future copies at 50% off...the consignment being just a way to get things started for someone I really wanted to work with but couldn't front the cash.

[guildofblades]

When our company was a lot younger we tried a number of consignment deals. Of those, I would say only about 30-40% of the worked out well. Here is a basic run down of some of the things that happened.

1) Store recieved box of goods, put them out and sold them at roughly usual turn rates that our stuff gets in the average store. They report monthly and paid us, but usually only when we came asking for it. Most never stuck to any sort of actual schedule with regards to inventory updates or payments.

2) Scenario #1 above, only it was like pulling teeth to get paid.

3) Store recieved goods, but tried to claim it never did. Kind of silly with trackable shipments....

4) Store recieved good, but never bothered to crack open the box and put the product up for sale.

5) One store had product for sale, then hit hard times and put everything, including our consignment stuff, on sale for 80-90% off. It was by shier luck we happened to wonder into the store the day before his landlord was going to boot them. We liberated our unsold product, were forced to take only partial payment in cash for what had sold, and actually took other manufacturers products in trade for the remainder of what the store owed us. Had to sell that stuff on E-bay to recoup those costs.

6) Store goes under without us catching them in the most of closing.

And even for those time where the arrangement was working ok, as soneone pointed out, it creates a book keeping nightmare.

So now we only do two consignment deals. One with our most local retailer, who we have been doing business with for years. And another with a big convention retailers who we have also been doing business with for years. Everything else is credit card payment up front, or net 30 day terms, depending on each account.

That being said, as a company we have gone to some great length to lesson a retailer's risks. Like we offer discounts as high as 60-65% off, depending on account type of order volume. We offer a no question, no hassle stock rotation program and other support programs. That and have a pretty good sized catalogue of games, so a retailer can place a fair sized order with us and still only be ordering each title at 1's and 2's in quantity.

[Luke]

hi matt,

i'd be happy to work something out.

PM me if you're interested.

-L